The marketing environment encompasses all factors that have an impact on one's capacity to build profitable relationships with the target market. It's never static in marketing. It works in a changing environment. The marketing environment has an impact on marketing goals, performance, and results. The internal and external forces of marketing have an impact on every marketing activity, plan, and policy. The marketer must therefore consider the advantages, disadvantages, dynamics, and constraints of both internal and external forces while forming a strategy before moving forward with the decision-making process; otherwise, reaching the objectives would be challenging. These factors and causes that affect marketing might be both under our control and out of our control. Businessmen can modify the strength of some forces by their actions, but they should also adapt the organizational structure and strategy of their companies to reflect the shifting power dynamics. It is important to research the characteristics, behaviours, and impacts of these forces.
"A company's marketing environment consists of the actor and forces that affect the company's ability to develop and maintain successful transaction and relationships with." its target customer."-Prof. Kotler
Any business's goal is to use business strategies to win over the target market and boost earnings.
To do this, a positive relationship with the customer must be built. A businessman can only succeed in his endeavours if his chosen plan is fully carried out. According to the objectives, it is required to adjust all the forces or components that have an impact on business performance. The term "marketing environment" refers to the whole of all the forces or components that surround a given product and have an effect on how it is bought and sold.
Controllable and uncontrollable marketing environments are the two sorts that exist. Generally speaking, the elements or forces found in market science that the marketer has the power or discretion to alter are referred to as controllable environmental elements, whereas the forces that the marketer is powerless to alter and must adapt his actions and self in response to those changes are referred to as uncontrollable environmental elements.
From a study point of view, Prof. Santon split the marketing environment into two categories: micro and macro. Market, intermediary suppliers, and distributors are examples of micro forces, whereas demographic, economic, social, cultural, political, legal, technological, and competitive pressures are examples of macro forces.
Internal Environment
The organization's marketing management duties can take into accounts the internal environment of marketing, which encompasses both human and non-human factors that fall within its purview and are directly related to how it operates. The internal environment can be easily managed and made self-adaptive by marketers and management. The following points can help to clarify the marketing subject of internal environment:
Vision, mission and objectives of the organization: It speaks to the position that the business aspires to in the coming years. The company's business and the rationale behind its actions in the market are referred to as the mission. Every component of a company organization's regulatory structure is referred to as its value system. It comprises the work procedures, norms, culture, working conditions, and management procedures of the organization. Each employee is required to complete their allocated tasks within their framework.
Corporate Culture: Corporate culture refers to institutional traditions relating to the attitudes, conduct, and beliefs of an organization. This culture also represents how management and staff interactions should be conducted, as well as how external affairs should be handled.
Organizational Structure: Organizational structure outlines the framework, in general, within which all business operations must be carried out in order to achieve the organization's ultimate objectives. Different types of organizational structures include functional structure, departmental structure, bureaucratic structure, matrix structure, etc.
Physical resources and technical capacity: Physical resources are tangible resources that can be measured as part of a business organization. While the technical capabilities are tied to the technical knowledge and skills of the organization, these resources determine the organization's ability to compete.
Human Resource: The fundamental resource that determines whether an organization succeeds or fails is its human capital. They successfully complete their tasks within the allotted times.
Finance: A company organization's financial situation directly affects the size or scope of the marketing efforts it makes. The capacity of the company to finance marketing and promotional initiatives is determined by its profitability, liquidity, and cash flow.
Business Goodwill: Goodwill is an important intangible asset that describes a company's reputation in the marketplace. A company can project a positive image in the minds of people if it has established a solid reputation in the market. If a company has a poor reputation in the market, it may find it difficult to acquire clients even in an environment of intense competition.
Labor unions: Labor unions are a significant influence on any corporate organization's internal climate. Organization is the term used to describe the group of all the personnel who make up the organization's leadership. For all employee categories, this body bargains collective agreements governing pay, leave, and working conditions. To maintain the efficient operation of the company organisation, management and the union must have a good working relationship. Organizations should encourage their staff to speak up and take part in decision-making.
External Environment: Micro and Macro Environment
The external environment is studied by dividing it into two parts, micro and macro.
Micro environment
The micro environment of marketing refers to the collective of forces that exist within the organization in various configurations. These forces have an impact on marketing, production, effectiveness, and goal achievement. Within the corporate structure, there are numerous microenvironments. The micro environment is subject to change and influence by marketing. Microenvironment is an element in a corporate organization's success and weakness. The ability to serve consumers, draws customers, and satisfies customers through product mix are all impacted by the microenvironment, which also has an impact on the marketing mix. When creating regulations, each company should only develop a strategy after researching the strength of these environmental pressures. The forces and elements within the micro environment can be mentioned as follows:
1.Organizational Activities:
The organization's activities comprise both its actual activities and aspects connected to the management and internal components of the business organization.
Production: The Company ought to be able to predict demand ahead of production. The customers will switch to the competitor's product if the product cannot satisfy the demand. The management of a warehouse for manufactured items should prevent any degradation in the usefulness of the products that cannot be sold. The product should be high-quality and appealing thanks to new technology.
Finance: Without adequate funding, it is impossible to produce goods and services. To match the product to the demand, significant expenditure is required. Due to a lack of funding, programs for developing products like diversification, propagation, and research are not feasible. The source, acquisition, utilization, and equitable distribution of funds should all be taken into consideration. The primary resource for achieving the goals as anticipated is money, along with market-related regulations and programs.
Human Resource Management: Without human resources, no marketing program can be used in practice. The marketer should pay close attention to the accounting of the needs for human resources, resource creation, acquisition, use, and upkeep. An organization's human resources contribute to its smooth operation. Quality human resources are the wellspring of quality products. Human resources that are capable and effective become crucial to the effectiveness of the organization. Less than necessary human resources make it difficult to complete daily tasks, while excessive money resources are abused.
Research and Development: By modifying the product in accordance with changes in time, technology, and the needs and wants of the consumer, research and development become essential to satisfying the customer. The organization benefits from timely research and the creation of new products, which also enhances the firm's reputation. The customer can be satisfied to the fullest extent in this way. Information regarding the present state of the market, consumer requirements, product attributes in line with customer preferences, competitive movements, etc., is provided by market research.
2. Organizational Scope:
The organization's work base determines its scope. This covers the organizational structure, goals, and policies that have been enacted by the company, as well as the institutional culture and resources that are accessible. For the organization's successful future, it is important to synchronize timely policies, resources, and goals. This features the aforementioned features
Objectives: The organization's existence is the policy that enables the achievement of the objective. The organization's responsibility also includes maximizing profit while adjusting for time-sensitive goals. In a market with perfect competition, any firm strives to establish monopoly through its strategies and practices. The organization has set goals for this aim, including company growth and modernization, effective operations and financial success, as well as carrying out social responsibilities. The proper purpose directs the organization and provides it with guidance. The organization must adjust its existing policies and develop a timely policy in order to accomplish difficult goals like profit maximization, market leadership, and market share expansion.
Organizational Structure: The organizational structure of a corporate organization is determined by the work analysis. The division of labor is better coordinated by organizational structure. Businesses should consider factors like departmental units, monitoring and evaluation, planning, and program units when creating an organizational structure. Coordination of tasks from product production to sales is maintained by organizational structure. Marketing activities should be carried out in accordance with the roles and connections established by the organizational structure. The amount of labour, responsibility, duty, and accountability in marketing increases.
Resources are limited but are necessary for the functioning of organizational activities, including natural, human, and financial information obtained through technology and other material resources. Consequently, efficient use of limited resources is required.
Organizational culture: Values are established norms. The employee learns how to act within the company with its assistance. Formal regulations give art organizations the chance to learn how to modify the products that are created by current social norms. Conducting economic activities while disregarding societal values, conventions, beliefs, customs, identity, etc. is unthinkable. Consumer sentiment is related to traditional notions. The act of buying is sparked by emotion.
3. Stakeholders:
Customers, suppliers, competitors, market intermediaries, labour organizations, and pressure groups are examples of stakeholders in the micro environment. Without effective adjusting of these components, the organization may have a crisis. Such groups are all collectively stakeholders. The stakeholders should always be held responsible by the organization. A marketer's skills also include the ability to mobilize the stakeholders in accordance with organizational needs. In addition
Customers: Customers are the people who pay for goods and services. The cost that customers pay for the goods and services is how the business organization makes money. The goal of all marketing initiatives and business strategies is to draw clients and encourage them to buy more goods.
Suppliers: Suppliers are businesses that provide the raw materials, equipment, technology, and human resources needed to support a business organization's production. It is impossible to make goods without suppliers. It is wise to choose the supplier solely through a contract because the delivered goods' quality, price, size, etc. directly affect how satisfied the consumer is. A delay in the supply of goods hurts the organization's reputation. Because of this, a good marketer ought to be able to choose suppliers carefully.
Intermediaries: Market intermediaries entice consumers with their actions. Additionally, mediators offer product information, research consumer purchasing patterns, divulge information about rival businesses, and make financial accommodations in a variety of circumstances. The sales middleman purchases products from the manufacturer and delivers them to the client in the same capacity as a wholesale and retail trader under the middleman.
Competitors: Groups that are willing to sell a different brand and service to the target market in order to sell a different brand and offer services from a different organization are considered competitors. By lowering the amount of goods and services sold, rivals might lower the profit margin. The scope of competition has increased due to globalization.
Labor Unions: The goal of labour unions is to inform and exert pressure on management on the rights and protection of the employees who work for the organization. Through the use of collective bargaining techniques, business organizations must keep their relationships with employees positive. Politically and legally aware organizations include labour unions. Their actions immediately impact the organization's level of performance. Since strikes and business closures hurt both the company's bottom line and its reputation, it's critical to have a win-win partnership with labour unions.
Pressure Groups: Pressure groups are voluntarily organized groups that work to advance a common cause and uphold the rights of their members. Pressure groups include, for example, organizations that safeguard consumers, the environment, human rights, women, and consumers' interests. After accomplishing their objectives, these groups frequently dissolve. In keeping with the reason the pressure group was formed, it occasionally applies pressure in an effort to make the corporate organization aware of its obligations.
Media: Examples of media that are operated with the intention of disseminating information include newspapers, magazines, radio, television, newsletters, the internet, social media, etc. Information can be spread widely through communication channels. Media information offers businesses both benefits and difficulties. Organizations advertise their products and services via communication media. The marketer should always have a cordial relationship with the media because if bad news in the media has a negative impact on the market's demand for their products, the sales distribution will diminish.
The government: The government has decided to regulate commercial activity. Marketers' actions have been directly impacted by government regulations, laws, and decisions regarding the market. To prevent illicit marketing practices and advance the interests of consumers, the government forbids marketers from having exclusive rights in the market. To avoid breaking government restrictions, marketers should occasionally check with legal advisors and local government authorities. Marketers are required to adhere to all government regulations, directives, and laws.
Micro environment
The macro environment of marketing refers to the more significant social forces that have an impact on both the marketing mix and the micro environmental components of marketing. Marketing is impacted by and challenged by the external environment. A smart marketer should therefore be able to seize these opportunities and benefit from the environment's dynamics. Only if marketers are able to foresee the changes that will be required in the internal environment of the company in order to meet future problems can they modify their strategies and plans in accordance with their aims. Since the macro environment directly affects decision-making, extra care is taken while choosing the marketing mix. All significant environmental influences are interconnected, varied, and uncontrollable. The study of these components is crucial since changes to one component have an impact on the others as well. The organization should give special consideration to its initial structure when such changes of elements and abilities are outside its control. By gathering, assessing, and analyzing data regarding changes in the key environmental influences, marketers may take advantage of opportunities and reduce difficulties.
1. Political and legal environment
The political environment consists of laws, the government, political parties, government agencies, and policies that influence market science. The government is formed by a coalition of political parties, and the government enacts laws to meet its needs, so the political and legal environments are inextricably linked. Marketers' programs and promotion plans must be in accordance with government agencies in order to protect their existence in the face of market expansion and competition. It is necessary to adhere to the product's quantity, quality, price, government agencies, and regulations. The government has also provided legal recognition to protect businessmen, and it has enacted consumer protection laws to protect consumers from fake goods, false advertisements, and substandard goods. Government policies and regulations are designed to safeguard social and cultural values.
Marketers should learn not only about their own country's laws, but also about the policies of regional trading blocs. As a result, regional business groups will put pressure on the government to pass special laws, which must be studied.
A. Political Forces
a) Political Situation
b) Political Institution
i. Legislature
ii. Executives
iii. Judiciary
c) Political Philosophy
i. Capitalism
ii. Socialism
(d) Legal Forces
i. Laws
ii. Courts and law
iii. Law administrators
2. Economic environment
The economic environment is a powerful environmental force that influences decision making in the macro environment. Marketers should conduct thorough research on factors such as income distribution, consumer purchasing power, inflation rate, credit availability, exchange rate, and so on before making future decisions. The marketing economic environment has a financial impact on the organization. It affects the producer's production as well as the market demand for the product by changing the consumer's purchasing power. Market science's economic environment is concerned with the economic situation, national income and wealth structure, monetary and financial policy, personal income level, employment opportunities, inflation rate, resources and means, resource availability, market rates, distribution channels, credit acquisition, capital market, institutional infrastructure, consumer purchasing power, and so on.
Economic System: The marketing economic system investigates the role of the private sector in influencing the market sector. A free market economy exists when the means of production are owned by the private sector. Individual effort drives the market in such an economy. Profit is the driving force behind commercial enterprise. Sometimes the means of production are owned by the government. There is no freedom of choice, and public institutions take precedence. A planned economy is one that operates in this manner. In Nepal, the government has pursued a mixed economic policy. The government has acted as a regulator in this regard.
Economic Policies: Examples of government-directed economic policies include monetary policy, industrial policy, and financial policies. The government controls the money supply, interest rates, foreign exchange rate, and credit availability through monetary policy, and fiscal policy is introduced to direct things like government procurement, government subsidies, and so on. Industrial policy has been implemented to aid in nation building by establishing industry, concessions, foreign investment, technology, and developing industry. Because economic policies have a direct impact on the market, market scientists should make decisions based on these policies. Economic policies influence market interest rates, wages, taxes, foreign exchange, and other economic activities.
Economic Situation: The economic situation of any country is constantly changing. Changes in factors such as natural resource availability, income distribution, inflation rate, and economic health force the nature of the nation's economic condition to change. Income level and distribution influence disposable income by influencing investment and spending. Although every country emphasizes economic development, factors such as high unemployment, low investment, and low GDP make it difficult to accelerate development. Income reflects the effects of factors such as business cycle booms, busts, and recoveries. The investigation of such elements is required because inflation will raise costs, affect demand, and reduce demand.
Regional economic groups: We live in a globalized world. Global market changes affect trade, investment, technology, labour, and managerial skills. Regional economic organizations are removing trade barriers. It promotes a free trade policy. It promotes a free trade policy.
3. The Socio-Cultural Environment
A country's socio-cultural environment refers to its predominant religion, tradition, customs, festivals, values, language, lifestyle, art culture, habits, class structure, and so on.
Because people differ, so do their desires, times, and forms of goods and services. Migration, study, and other factors cause changes in the social and cultural structure. When a marketer develops an organization's strategy, it is critical to research the socio-cultural environment. When performing activities such as naming and marketing goods, special consideration should be given to the recognition of social values. The following are examples of social and cultural environments.
Demographic Environment: The demographic environment consists of elements such as total population growth rate, migration, birth and death rates, and the population distribution structure of a specific area. Because product desire and purchasing behavior vary according to population structure and age, this element must be thoroughly researched when planning the product's packaging, advertisement, and promotion. Women's cosmetics preferences, children's toy preferences, plains and mountain costumes, differences in religious festivals, and the demand for such items are all examples of this.
Social Institutions: Society is undergoing change. Social change has an immediate impact on aspects such as lifestyle, income, and choice. Values, attitudes, and religion are advocated by family, social class, and reference group. The item's selection changes accordingly. To maintain inter-community relationships, social classes strive for social cohesion.
Change in Life Style: A person's lifestyle is determined by factors such as income, social values, culture, and so on. Customer attraction to quality and expensive goods is one of its benefits, along with changes in income. A person's perception of himself and his society is shaped by his standard of living. Individual desires, perceptions, and actions are influenced by changes in living standards. The desire, perception, and activity of the individual in purchasing behaviour are influenced by changes in the standard of living. With the change in living standards, there are changes in purchasing behaviour, personality, financial condition, psychology, and motivational elements for purchase, so the marketer looks at the nature of the potential market and what kind of customer to put in the category of potential customers when presenting the product, the form of the slogan to be used when advertising the product in the product presentation and marketing process.
4. Technological Environment
Technology refers to the methods used to support practical products, high quality, and innovation. Advertising and technical issues are studied under this heading. People are more interested in new technological inventions and are willing to pay more for them. Marketers should be able to select high-level technology when producing goods so that their products outperform competitors in terms of quality, durability, attractiveness, and profitability. To convert input into quality output, advanced technology is required. It includes:
- Level of technology
- Pace of Technological Change
- Technology transfer
- Research and development
